ADB loan for Vietnam's Thanh Hoa city

By Richard High10 March 2009

The Asian Development Bank (ADB) has approved a US$ 72 million loan to help develop and upgrade key urban infrastructure and services in the city of Thanh Hoa, Vietnam where a lack of employment opportunities is forcing many people to move to large cities such as Ha Noi and Ho Chi Minh City.

The loan will finance a large portion of Thanh Hoa's US$ 118 million Comprehensive Socieconomic Development Project, which is part of a nationwide government plan to promote sustainable development in Vietnam's mid-sized cities.

The loan will facilitate road and bridge construction and rehabilitation, the replacement of damaged water pipes, improvements to sanitation facilities, and upgrades to a museum and other key tourism sites. Teacher training and other steps to address skills shortages will be carried out, while the Water Financing Partnership Facility (WFPF) grant will be used to reform and strengthen Thanh Hoa's water supply and urban environment companies.

The ADB's loan, from its concessional Asian Development Fund has a 32-year term, including an 8-year grace period with an interest rate of 1% a year, and a rate of 1.5% for the rest of the term.

The ADB will also provide a US$ 2 million grant through its WFPF to improve Than Hoa's water supply. The WFPF grant includes US$ 1.2 million from the Multi-Donor Trust Fund and US$ 800000 from the Netherlands Trust Fund. The WFPF grant includes contributions from Australia, Austria, Norway and Spain, and the Netherlands Trust Fund is financed by the Government of the Netherlands.

The ADB loan and the WFPF grant cover 63% of the total project cost. The Government of Korea will provide a US$ 32.7 million loan and the Government of Vietnam US$ 11.2 million.

The Thanh Hoa Provincial People's Committee is the executing agency for the project which is due for completion around the end of June 2014.

Thanh Hoa, in north central Vietnam, has a population of 200000 with major industrial and tourism potential. According to the ADB, infrastructure gaps and a shortage of skilled labour in areas targeted for development have held back investment.

To transform Thanh Hoa into a competitive and livable city, said the ADB, the project has adopted an integrated investment program to upgrade infrastructure, boost skills and human resources, build up the capacity of key service agencies, and enhance its tourism potential.

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